Expats in the United Arab Emirates (UAE) are racing to buy up gold after the sharpest drop in prices for 70 years.
Retailers in Dubai and Qatar – famed as gold buying hotspots – are rumoured to have taken stocks of the precious metal off display until the value goes back up.
Since gold bars in the emirates are increasingly hard to come by, those looking to make their money on bullion are snapping up small items of jewellery instead.
The news comes after the US Mint announced on April 23 that it had suspended sales of its one-tenth ounce American Eagle gold bullion coins due to surging demand. Bullion's plunge to two-year lows was said to have depleted the government's inventory.
Dubai and Qatar are famed for their gold festivals and even vending machines dishing out precious metals in bars. However, in a recent letter to the 7Days in Dubai newspaper, a reader complained about struggling to find gold.
“When my husband went to the Sharjah Gold Souq, known as Central Souq, the salesmen there said that they don’t have any in stock,” she wrote.
“He also told my husband not to waste time, as no one is selling gold, even though they have it in stock. My husband checked in a couple more shops and they all said the same thing.”
Expats looking to join the gold rush are heading to the markets and smaller stores to buy gold jewellery and coins, which have seen a surge in demand since the financial crisis made currency an unstable investment. Even expats on low incomes are ploughing the little money they have into small gold items.
The Peninsula newspaper in Qatar reported that the majority of customers at jewellery shops in Doha were low income and single workers.
Since the drop in value, stores such as Sky Jewelry in Doha gold market have reported that their business has doubled. “More than 75 per cent of our customers are single workers,” a salesman from the store told the newspaper.
Telegraph Expat blogger Annabel Kantaria, who is based in Dubai, said rumours persist there that gold bars are being taken off the shelves until the price bounces back – with expats told they are out of stock. “Someone wrote to another newspaper claiming that all the shops are in it together,” she said. “That's all I've heard. I find it hard to believe they will have run out – it’s far more likely that they are refusing to sell.” The fall in the price of gold took some analysts by surprise. An OCBC Bank report last year forecast that gold prices would soon hit around $1,800 per ounce. That followed record rises in value since 2010 – but the current price hovers just above $1,400 per ounce.
Gold coins are reported to have been in demand in the US too. In just over three weeks in April, the US Mint sold 175,000 ounces of American Eagle gold coins. Final sales are still being counted but dealers expect the figure to rival a high of 231,500 ounces set in December 2009.
Michael Kramer, president of Manfra, Tordella & Brookes, a coin dealer in New York, has been inundated by orders from existing and new wholesale and retail customers. "It's panic,” he said. “This is one of the busiest times in quite a while. People think gold's at its lowest and they want to take advantage."
Source : Telegraph